As electric car sales slump and Tesla (TSLA) loses its grip on the self-driving race, Elon Musk is pivoting to humanoid robots as the future.

Tesla’s board, however, has a different view, and they have asked investors to approve a new pay package worth about one trillion – with a T – for Musk. Tesla will also ask shareholders to vote on whether it should invest in another of Musk’s companies, xAI, which merged with X (nee Twitter) this year.

“A fundamental challenge for Tesla is retaining Mr. Musk’s vision and commitment,” the company said in the shareholder filing about the decision. “Retaining Mr. Musk is not merely wise, it is essential to unlocking the full potential of Tesla’s future.”

In an effort to keep him focused on the company, Tesla is offering Musk twelve tranches of shares, to be granted if Tesla hits certain milestones over the next decade. The first payout is contingent on Tesla reaching a market cap of $2T, about double what it is now.

Other product goals include delivering 20 million Tesla vehicles, 1 million Robotaxis operating commercially, 10 million active Full Self-Driving (FSD) subscriptions, and delivering 1 million robots. This seems to suggest that Tesla continues to believe their vehicles, and AI enhancements to said vehicles, is the way forward.

This comes as Tesla is appealing a ruling against a previous enormous pay package for Musk, but that’s another story.

Tesla’s valuation has to some extent always been premised on Musk’s promises of a science-fiction-type future. For a long time, its first-mover status among electric vehicles and its well-publicized strides into self-driving buoyed shares.

Now, however, the rest of the world is catching up to that vision – and many are doing it more cheaply and more effectively. China is in the middle of a domestic EV arms race, while EV popularity (along with Tesla’s) has faded in America. Waymo has more self-driving taxis than Tesla, there are lots of nascent startups like Aeva (AEVA) making deals within the space, and the AI company Tensor just debuted its own “fully autonomous” vehicle for private ownership.

So, Tesla needs to find the next dream of the future to keep its promises to investors.

Humanoid robotics is a hard pivot from making cars, but it’s the new marvel of the technological age. Elon claimed this week that 80% of Tesla’s value could eventually come from their Optimus robots, faceless humanoid machines that Tesla says change the “perception of labor itself.”

They are still in the nascent stages of development, but Musk claims Optimus robots are already performing “simple factory tasks” for Tesla. He has suggested they may be for sale to other companies as soon as next year – and eventually will be available to consumers. The price target for the bots is $20K-$30K once production scales up.

However, Tesla isn’t a first mover in this space. An early mover, certainly, but many other companies are dabbling in the arena. Enough that China just held the World Humanoid Robot Games a few weeks ago, where around 500 robots from sixteen countries competed in events like track, field, martial arts, and practical tasks.

While many of the robots struggled, the event itself shows how much money, time and brainpower is being poured into this area around the world. The U.S. and China are both racing to stay on top of the AI game and will likely be interested in this new field for years – and China could win. Morgan Stanley predicts that by 2050, China will have 302.3 million humanoid robots in use – while the U.S. will only have 77.7 million.

In order to win this race for itself, Tesla will either have to have the best robot on the market, or the most affordable. So far, it hasn’t shown signs of either, but this is early stages. Will investors keep buying in, or will the slowdown of its electric vehicle business weigh more heavily on shares?

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